Securities and Exchange Board of India (Sebi) has disposed off a complaint against the initial public offering (IPO) by Anil Ambani-promoted Reliance Power (RPL) by asking the promoters to lock-in the entire 20% of their contribution to the share offer for five years from the date of the IPO.
The regulator, however, said the thrust of the argument by the complainant was with respect to shortchanging the shareholders of Reliance Energy (REL) rather than Reliance Power, and hence, the shareholders of REL could take up the matter with the Ministry of Corporate Affairs under whose jurisdiction most of the allegations fall.
The Sebi order, say merchant bankers, clears the hurdles ahead of the mega IPO of $2.5-3 billion, which is expected to hit the markets early next year.
A complaint filed with the capital markets regulator had alleged serious breach of corporate governance in the case of Reliance Energy, also promoted by Anil Dhirubhai Ambani Group (ADAG), for the transfer of high value projects such as Rosa Power, Sasan Power, Butibori, Shahpur Coal, Dadri etc to a company (RPL), which is owned 50% by Reliance Energy and the remaining 50% by the promoters of REL.
The complaint by Rajkot Saher/Jilla Grahak Surakha Mandal had alleged that the proposed IPO by Reliance Power was used by the promoters of RPL to "subvert the spirit" of the rules to gain "huge benefits using several front companies and by means of merger and amalgamation."
Sebi, which heard both the parties on December 4, said it has no jurisdiction to initiate action or conclude a finding on this front.
While asking the promoters to lock-in their contribution of 20% for a 5-year period, Sebi said: "The objective of mandatory promoters’ contribution and lock-in are to ensure commitment of the promoters of the company making IPO and stability of the issue and to ensure that investors are not deceived by fly by night operators."
Understanding Short Term Trading
Before I begin, this blog is not for intraday traders. My definition of short term implies duration of around 2 to 3 months.
Short Term stock picking is no rocket science, but rather a visual interpretation of technical charts. A basic moving average on a time frame chart will show the direction of the securities movement.
Moving averages is a mathematical results calculated by averaging a number of past data points. Moving averages (MA) in it's basic form is calculated by taking the arithmetic mean of a given set of values on a rolling window of timeframe. Once the value of MA has been calculated, they are plotted onto a chart and then connected to create a moving average line. Typical moving averages used for short term trading are 50 MA and 100 MA.
Types of Moving Averages
1) Simple Moving Average (SMA)
SMA is calculated by taking the arithmetic mean of a given set of values on a rolling window of timeframe. The usefulness of the SMA is limited because each point in the data series is weighted the same, regardless of where it occurs in the sequence. Critics argue that the most recent data is more significant than the older data and should have a greater influence on the final result.
2) Exponential Moving Average (EMA)
EMA overcomes the limits of SMA, where more weight is given to the recent prices in an attempt to make it more responsive to new information. When calculating the first point of the EMA, we may notice that there is no value available to use as the previous EMA. This small problem can be solved by starting the calculation with a simple moving average and continuing on with calculating the EMA.
The primary functions of a moving average is to identify trends and reversals, measure the strength of an asset's momentum and determine potential areas where an asset will find support or resistance. Moving averages are lagging indicator, which means they do not predict new trend, but confirm trends once they have been established.
A stock is deemed to be in an uptrend when the price is above a moving average and the average is sloping upward. Conversely, a trader will use a price below a downward sloping average to confirm a downtrend. Many traders will only consider holding a long position in an asset when the price is trading above a moving average.
In general, short-term momentum can be gauged by looking at moving averages that focus on time periods of 50 days or less. Looking at moving averages that are created with a period of 50 to 100 days is generally regarded as a good measure of medium-term momentum. Finally, any moving average that uses 100 days or more in the calculation can be used as a measure of long-term momentum.
Support, resistence and stoploss can be infered by referring the closet MA below or above the market price. The other factor that is used in short term momentum is the trading volume. The moving averages along with the trading volume can provide a better insight to short term movement.
Markets are moved by their largest participants - I believe this is the single most important principle in short-term trading. Accordingly, I track the presence of large traders by determining how much volume is in the market and how that compares to average. Because volume correlates very highly with volatility, the market's relative volume helps you determine the amount of movement likely at any given time frame--and it helps you handicap the odds of trending vs. remaining slow and range bound.
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